The Washington Post’s Neil Irwin analyzes if the mortgage crisis has led to an inappropriately expanded role for the public/private Federal Reserve. The Fed this weekend engineered the loans necessary to bail out Fannie Mae and Freddie Mac. It did the same with Bear Stearns. The Fed’s mission, however, is to manage the money supply in a way that brings about price stability and low unemployment. As a government agency, it is supposed to tackle financial stability.

The Fed claims it’s only taken this expanded role due to the dire straits of the economy. But the subprime mortgage crisis has been going on now since last August.-MB

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